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The U.S. Dollar rallied against a basket of currencies on Friday to its highest level since January 10, but struggled to hold on to its gains into the close as investors digested a government report showing slower first-quarter economic growth. The index was also pressured by a slight decline in U.S. Treasury yields. Nonetheless, the index was able to post its strongest week since November 2016.
On Friday, June U.S. Dollar index futures settled at 91.343, down 0.022 or -0.02%. Earlier in the session, the index hit 91.790, its highest level in three months.
According to reports released on Friday, the U.S. economy slowed in the first quarter as consumer spending grew at its weakest pace in nearly five years. The employment cost index came in at 0.8%, beating the 0.7% estimate and advancing above its previous 0.6% reading. University of Michigan Consumer Sentiment was 98.8, slightly below the 98.0 estimate. In March, the index was at 104.1.
Euro
The Euro rebounded from earlier losses to post a higher close for the session. The early selling was fueled by Thursday’s dovish European Central Bank monetary policy statement. The ECB left interest rates unchanged and offered little on the timing of its next rate hike. Driving most of the selling pressure this week was a major liquidation by speculators who came into the week holding record long positions.
The EUR/USD settled at 1.2129, up 0.0027 or +0.22%.
British Pound
The British Pound finished sharply lower on Friday with the biggest loss among the major currencies. Traders turned bearish on the Sterling after weaker-than-expected first-quarter growth numbers reduced the chances of a rate hike next month.
The GBP/USD settled at 1.3776, down 0.0137 or -0.98%.
In the U.K. Preliminary GDP came in at 0.1%, well below the 0.3% forecast. The previous reading was also revised lower to 0.4%. The data showed Britain’s economy grew at its slowest pace since the fourth quarter of 2012.
U.S. Treasury Markets
U.S. Treasury yields edged lower on Friday after weak consumer spending data muted a better-than-expected initial first-quarter read on economic growth.
Following the U.S. GDP report, the yield on the benchmark 10-year Treasury note was lower at around 2.959 percent, while the yield on the 30-year Treasury bond was lower at 3.128 percent.
This article was originally posted on FX Empire